rabsody

I think you misunderstand my original post. I don't think rapidly rising house prices are a good thing - as I said it's all relative anyway. Indeed, I am quite concerned about the housing crisis in Qld and the implications for future generations (inc. my own children). The aim of my post was actually to point out (in a non-negative way otherwise you get jumped as whingeing pom on here) to those that are moving here that prices are no longer in the 'buy a mansion for $250k bracket' and people need to be realisitic in their expectations when they get here. You see too many coming in with the belief they can purchase the big house, cut back working hours, survive on one wage etc, when realistically it can be just as hard to get by as UK these days.

The 'exciting transformation in Brisbane' I refer to is in relation to the maturing of the City - better facilities, more restaurants, bars, things to do, shops etc. Admittedly this is likely due to both the dollars and expectations of the hordes moving from interstate, but it was not meant to pertain to the increase in people's property value.

Nursebank

http://www.ft.com/cms/s/0/70c259aa-5...0779fd2ac.html

Contagious ready-to-lend mindset spins tales of woe
By Jim Pickard

Published: September 10 2007 03:00 | Last updated: September 10 2007 03:00

Its happened in the US, its happening in the UK, and it will happen in OZ.

Its why house prices are so high, and its why it will have a negative effect on the local economy in Brisbane. High house prices are Bad for the oridinary working class people who just want a place to call home and raise their kids?


If house prices fall in the UK it will be interesting to see what happens to legions of over-leveraged, over-optimistic property buyers.

Subprime in the UK now accounts for 8 per cent of the total mortgage market. That is worrying enough. But are there other subprime mortgages out there, masquerading as prime?

Lenders are suddenly rushing to tighten up their lending criteria in the wake of the debt crunch. It is possible that they are too late.

Here are a handful of personal anecdotes to illustrate the lack of controls in the mortgage lending market, in ascending order of extremity. All the names have been changed to protect identities.
1] Jason is an old friend who works as a gardener. He obtained his self-certified mortgage last year by presenting proof of income from the summertime when he comfortably earns £1,500 to £2,000 a month. His lender is unaware of his winter income; about £600 if he is lucky. When his two-year fixed-rate deal ends, he is facing a 30 per cent jump in mortgage costs.

2] John, another friend, is a self-employed IT consultant. He and his girlfriend Tina last year borrowed three times their combined salary to buy their first house. The mortgage broker was aware that Tina was pregnant. He happily ignored the box asking if the couple were aware of any reason why they might not earn the same income in the future. Their floating mortgage has already risen five times.

3] Gary, a taxi driver, and his wife Nicole were encouraged to build a buy-to-let portfolio after joining a property investment club. The couple remortgaged their house and borrowed another £9,000 on credit cards to put down as deposits on new-build flats. The developer gave them a cash "discount" on their purchases that enabled them to get a 90 per cent loan to value instead of the usual 85 per cent. The couple thought that the rents on the two flats in Docklands would cover their mortgage when the properties are completed later this year. That now looks unlikely.

4] Douglas earns less than £30,000 a year. But he successfully borrowed £3m from a bank to buy 17 properties. The "deposits" on each building were paid by the company that sold the homes. He did not bother to look at the properties before buying them. But he soon found out that most of his new purchases were in a decrepit state................"

mancunian_bris

What has happened in Brisbane is similar to what has happened elsewhere. Brisbane used to be a very cheap place to live because it was classed as a small country town by those living in the southern states.
About 10 years or so ago, housing prices went up astronomically in Victoria and NSW. People started to realise that they could sell up and move to the warmer climes, buy a good home and still have a very good amount left in the bank. This was especially so when they saw that Brisbane was turning into a very progressive city but with a more relaxed outlook than Melbourne or Sydney and was thus an attractive proposition. Naturally, this pushed the prices of houses up in Queensland.

Simple supply and demand.

Nursebank

Spot the Trend here in the UK, its rather worrying? Whats Next?

Wonder what this graph looks like with a regard to OZ over the past 30 or so years?

But it don't look good here in sunny old Britain in the coming years?

on a mission

heres one,

two pommies, do self certificate mortgage, £180k on a £230k property lending £10k on CC to pay solicitors, stamp duty etc,

total income £3k a month, total outgoing £2,700, there is no flexibility to pay off CC, and unexpected events, like car problems, house improvements, no holidays, nothing for this gang.

All is consumed by home, and gerenal living costs for a family of four,

mortgage is £1300 a month.

There is a greater risk, now that CC's will be used to buy luxuries, spiralling the debt into further depressed states.


This is a problem which may bite in another 2-3 years, when the feel good factor has completly worn off.

I find it amazing that Brisbane is like this, as the locals dont on the whole earn mass sums of income. Its all being fuelled by international and interstate movements, I wonder how many locals are moving out as they cant afford it there???

Nursebank

Good post, i hope i am wrong, but Brisbane is starting to sound very similar to parts of Devon and Cornwall here in the UK. The locals are priced out.

asprilla

well, I disagree...its all a matter of expectations and lifestyle, I reckon.

For instance, I was speaking with a friend recently who said that he could never see himself buying a house for his family. I suggested that he could afford a smaller house, or a house a bit further out, or a unit...He could live in a place below his expectations for a few years, build up a bit of equity, then move to a better place.

But he said that he didn't want to spend several years of his life living somewhere that he didn't enjoy.

There are a lot of decently priced houses and units in and around brisbane....but there are also just as many people who want to skip this step and move straight into a 4bed home with a pool, not too far from work. Problem is - that's not the way the game works.

Things haven't changed - the house that you can afford to buy will always be much more ordinary than the house you can afford to rent. Have a look at the newspapers 50years ago and you will see stories about unaffordable housing.

"Things were much cheaper in my day"....

on a mission

No things were more sensible in your day.....

Now its have it now, now now, banks and agents know this..so hike it up, its not supply and demand. its manipulating the market to suit, and gullable idiots are going for it.

Nursebank

Good points, but i do not know the market in Brisbane, so cannot comment on cost relative to earnings there?

But your points do not stack up in DEVON AND CORNWALL, smaller area, low pay, very low pay, houses cost a hell of a lot, even a portable, but long term static caravan costs are laughable.

asprilla

Why not look somewhere more affordable, if purchasing a property is what you want to do?

Nursebank

Very true, very very true, the availability of the never never ending credit is contributing to this rise in the cost of houses. If the credit was not their, then a ceiling would be reached, like in the past.

The problem is the ceiling has been removed, all we can see is blue sky, loads of it painted in pounds and dollars. The problem is, all of a sudden since 09/08, this ceiling is being built back onto this house of cards, by way of the credit crunch, no more free money, credit will now be toxic, credit will be debt, credit will be bad, like the old days. This will put a stop to all this i want a house to live in and ten to rent out, borrow, borrow, sit back and watch me get rich?

Nursebank

Not interested in buying a house, not for at least five years anyway. Its far cheaper to rent here in the UK.

House where i live

100% mortgage = £900.00 per month interest only rent from the bank?

Rent = £500.00 per month

Not rocket science

And the best thing is, it has not gone up in value for the past 18 months, it may even be falling in value?

asprilla

But its also far cheaper to rent here in Oz, than it is to buy a house!

If you are going to wait 5yrs, try investing e.g. £200 a month in a share tracker. With a bit of good fortune you'll get yourself a decent deposit ! good luck !!!
Mark

rabsody

I see where you are coming from regarding expectations and to some extent i agree but the average price of house in brisbane is $450,000. This is across all suburbs (yes, even the shitty ones, and the ones further out) and is for an average house, which i'm assuming is not a 4 bed with pool. The average wage, on the other hand is about $45-$50k pa. I think, even if people lower their expectations, they are still going to find it extremely difficult to get on the property ladder.

rabsody

I agree it seems inherently wrong that a lot of people cannot get on the property ladder yet the govt offers big tax incentives for those who can afford multiple properties.